SIEM OFFSHORE INC. REPORT FOR THE FIRST HALF 2008 FINANCIALS

Transcription

1 SIEM OFFSHORE INC. REPORT FOR THE FIRST HALF July 2008 Siem Offshore Inc. (Oslo Stock Exchange: SIOFF) reports results for the six months and quarter ended 30 June FINANCIALS Results for the First Six Months 2008 The consolidated financial statements for Siem Offshore Inc. (the Company ) are prepared in accordance with International Financial Reporting Standards (IFRS). As a consequence, the results from associated companies are presented as a financial item and the realised and unrealised currency exchange gains/losses arising from the revaluation to market of open currency exchange contracts or the maturity of such contracts are presented as an operational item. The net profit attributable to shareholders for the first six months was USD 43.0 million, or USD 0.17 per share. The operating revenues and operating profit were USD 90.4 million and USD 35.7 million, respectively. Depreciation and amortisation were USD 15.4 million. Net financial items were positive with USD 8.3 million. The operating revenue includes reimbursement for operating expenses that are payable by charterers. The operating profit includes currency exchange gains of USD 13.4 million arising from the revaluation or maturity of currency exchange contracts during the period. Such currency exchange contracts have been entered into in order to fix the NOK commitment in relation to the vessels under construction at Norwegian yards. As of 30 June 2008, the Company has sold forward approximately USD 143 million, equivalent to NOK 0.8 billion, of the total future yard instalments of NOK 6.0 billion. Results for the Second Quarter 2008 The net profit attributable to shareholders for the second quarter was USD 15.3 million, or USD 0.06 per share. The operating revenues and operating profit were USD 47.7 million and USD 16.5 million, respectively. Depreciation and amortisation were USD 7.7 million. The operating profit includes currency exchange gains of USD 2.8 million arising from the revaluation or maturity of currency exchange contracts during the second quarter. Cash, Debt and Share Capital The cash position at 30 June 2008 was USD 147 million. The gross interest-bearing debt was USD 312 million and the shareholders equity was USD 510 million. The Company had USD 30 million available in undrawn borrowings under a loan and working capital facility at 30 June Future yard instalments for vessels under construction totalled NOK 6.0 billion (USD 1.2 billion). Such yard instalments fall due in 2008 with NOK 0.7 billion (USD 139 million), 2009 with NOK 3.1 billion (USD 608 million), and 2010 with NOK 2.2 billion (USD 434 million). There were 253,891,866 shares issued and outstanding at 30 June

2 FINANCIAL RISKS Interest and Currency Rates Risk The majority of the Company s assets are denominated in NOK. Future yard instalments and most of the vessels operating costs are nominated in NOK. Overhead expenses are primarily in USD, NOK and BRL. Management monitors these risks and enters into forward currency contracts for hedging purposes from time to time to reduce the exposure to currency fluctuations. Siem Offshore has entered into such currency exchange contracts in order to fix the NOK commitment in relation to the vessels under construction at Norwegian yards. Yard Risk The process for construction of new vessels is associated with numerous risks. Among the most critical risk factors in relations to such construction is the risk of not receiving the vessels on time, at budget and with agreed specifications. In addition, there is the risk of the different yards experiencing financial or operational difficulties resulting in bankruptcy or otherwise adversely affecting the construction process. The Company has obtained certain guarantees of financial compensation, including refund guarantees in case of delays and non-delivery, and it has the right to cancel contracts if delivery of vessels is significantly delayed. However, no assurance can be given that all risks have been fully covered. Delays and non-delivery of the vessels under construction would likely result in a loss of income for the Company, and could also possibly lead to breach of contract in respect of contracts entered into between the Company and third parties concerning employment of vessels. OPERATION DURING FIRST HALF 2008 The Company recorded 121 days of technical operational off-hire during the first half of 2008, of which 49 days refers to second quarter. The technical operational off-hire relates primarily to a breakdown of a crane on one of the vessels, scheduled dry-dockings and the installation of an accommodation unit. The Company has loss-of-hire insurance to compensate for the off-hire period in respect of the crane breakdown. The Company has agreed an increased day rate for the vessel on which the accommodation unit was installed. The Company took delivery of Seven Sisters from Kleven Verft on 30 June. The vessel commenced its 5-year charter with Subsea7 immediately thereafter. The Company held ownership in a total of 43 vessels at the end of first half, of which 18 were under construction and one was under conversion. The fleet in operation at the end of first half included 12 platform supply vessels ( PSVs ), 2 Multipurpose Field- & ROV-support Vessels ( MRSV ), 9 standby/crew vessels in Brazil and one well stimulation vessel. The 12 PSVs and 2 MRSVs reached 93% utilisation during first six month Siem WIS completed in June a full scale test of the Siem WIS CircSub at the Weatherford Technology and Training Centre in Aberdeen with positive results. The test of the Siem WIS CircSub was carried out over a three-week period, and a full integration, functionality and verification test of the system was performed. Results from the test provided support that the Siem WIS CircSub concept representing a solution to achieve constant circulation of drilling fluid during drillpipe connections. These results will form the basis for the up-coming pilot offshore operation at one of StatoilHydro s North Sea installations, which again will be important for the further development of the Siem WIS CircSub. 2

3 MAIN EVENTS DURING FIRST HALF January - The Company, through its 51%-owned subsidiary Siem Meling Offshore DA, entered into an agreement to acquire a shipbuilding contract for a large-size PSV of VS 485 design. The contract price is approximately NOK 315 million and the vessel is scheduled for delivery in first quarter January - Siem Meling Offshore DA terminated the 5-year contract for the large-size PSV Siem Sailor that was announced on 15 May 2007 and scheduled to commence during first quarter January - Siem Consub SA, a 100%-owned subsidiary, entered into an agreement with Petrobras Brazil to build two Fast Supply Vessels of GPA 150 design for 8 years plus 8 years time charter contracts. Siem Consub SA also entered into a 5 years contract with Petrobras Brazil for the Oil Spill Response Services Vessel ( OSRV ) Marati. 10 April - The Company and the shareholders of WellCem AS entered into an agreement whereby the Company shall have the right to become majority shareholder in WellCem AS for a total consideration of NOK 32 million. WellCem AS ( has developed the product ThermaSet which is a leak stop patented technology for the global oil and gas industry. The technology is proven and a number of full-scale contracts have been performed for international oil companies around the world. 6 June - Siem Consub SA, entered into an agreement with Petrobras to build two Fast Passenger Vessels for years time charter contracts. 20 June - Siem WIS was pleased to announce that the test of the Siem WIS CircSub at the Weatherford Technology and Training Centre in Aberdeen has been completed with positive results. 30 June The Company took delivery of the Seven Sisters and the vessel immediately commenced its 5-years charter. MARKET AND OUTLOOK The average utilisation and revenue figures for PSVs trading in the North Sea spot market increased steadily during the second quarter. We have obtained higher day-rates as compared to first quarter and we expect the day-rates to continue at these higher level during the summer. We also expect the utilization for the PSVs to remain high during the same period. The market for MRSVs saw a number of requirements during the first six months, but with few fixtures concluded. We now see an increase in the requirements and demand world wide, driven by some areas, in particular Brazil, Far East and West Africa. The utilisation for the MRSVs has improved during the second quarter as the season for project work has commenced. Long-term rates for MRSVs are still at good levels and it is expected that this will continue throughout the year. The increased activity in the global offshore oil and gas industry continues with the Brazilian market as one of the main drivers within the deepwater drilling and field development activity. The Company is well-positioned to serve the global oil and gas service industry by its increasing fleet of modern and high specification support vessels, including its series of high-capacity AHTS vessels. 3

4 Responsibility Statement We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 June 2008 has been prepared in accordance with IAS 34 Interim Financial Reporting, and gives a true and fair view of the Company s assets, liabilities, financial position and profit or loss as a whole. We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year, and major related parties transactions. 24 July 2008 Kristian Siem Richard England Bjørn Johansen Chairman (sign.) (sign.) (sign.) Ulf Sørdal Michael Delouche Terje Sørensen (sign.) (sign.) Chief Executive Officer (sign.) 4

5 Siem Offshore Inc Consolidated Income Statements (Amounts in USD 1,000) 2Q-08 2Q-07 YTD YTD Unaudited Unaudited Unaudited Unaudited Audited Operating revenue 47,674 34,434 90,379 62, ,342 Operating expenses -26,266-17,572-52,941-33,955-79,543 Depreciation and amortisation -7,733-3,910-15,406-7,728-18,961 Other gains /(losses) Gain on sale of interest rate derivatives Other gains /(losses) Currency exchange forward contracts 2,763 10,187 13,429 19,454 39,618 Operating profit 16,549 23,139 35,664 40, ,259 Net currency items , ,836 Result from associated companies Financial income 2, , ,667 Financial costs -3,734-3,048-7,994-6,028-13,756 Net financial items -2-2,000 8,251-4,915-1,287 Net profit before taxes and minorities 16,548 21,140 43,916 35,438 98,972 Tax expense ,937 Net Profit 16,074 21,072 43,327 35,348 97,035 Attributable to minorities ,333 Attributable to equity holders 15,315 21,309 43,036 35,782 98,368 Average number of issued shares ('000) 253, , , , ,811 Earnings per share, USD per share Consolidated Balance Sheets (Amounts in USD 1,000) Unaudited Unaudited Audited Non-current assets Intangible assets 9,232 9,232 9,232 Non-current tangibles 607, , ,023 CIRR loan deposit 95, ,467 Investment in associates and other financial fixed assets 53,775 17,948 18,088 Total non-current assets 766, , ,810 Debtors, prepayments and other current assets 86,071 66,662 88,484 Cash and cash equivalents 147,143 62, ,308 Total current assets 233, , ,792 Total assets 999, , ,602 Shareholders equity Paid-in capital 337, , ,987 Other equity 129,158 22,963 25,609 Net profit 43,036 35,782 98,368 Shareholders equity 510, , ,964 Minorities 21,346 11,273 13,895 Total equity 531, , ,859 Liabilities Deferred taxes 0 8,336 0 Other provisions Total provisions 898 8, Borrowings falling due after 1 year 282, , ,704 CIRR loan 95, ,467 Other non-current liabilities 33,575 20,894 32,698 Total non-current liabilities 411, , ,870 Borrowings falling due within 1 year 30,120 3,643 23,891 Trade creditors and other current liabilities 25,742 34,893 30,143 Total current liabilities 55,862 38,536 54,034 Total liabilities 468, , ,743 Total equity and liabilities 999, , ,602 5

6 Siem Offshore Inc Shareholders' Equity (Amounts in USD 1 000) Unaudited Unaudited Audited Shareholders' equity beginning of period 461, , ,009 Raising of new equity, net ,308 Net profit to equity holders 43,036 35,782 98,368 Other changes Currency translation differences 5,190 4,320 9,267 Shareholders' equity end of period 510, , ,964 Cash Flow Statements (Amounts in USD 1 000) Unaudited Unaudited Audited Cash flow from operations Profit before taxes and excluding interest 46,360 40, ,244 Interest paid -5,710-3,053-10,514 Paid taxes in the period ,410 Result from associated companies Other gains / losses Dividend received 863 3,251 5,088 Depreciation, amortisation and impairment of fixed assets 15,406 7,728 18,961 Change in working capital 17,459-14,985-26,477 Other changes -2, Cash flow from operations 71,496 32,946 93,869 Cash flow from investment Interest received 3, ,412 Investment in fixed assets and instalments shipbuilding contract -113,056-40, ,355 Investment in shares ,395-2,395 Received from sale of assets ,148 Changes in paid in capital associated companies -1, Paid- in capital subsidiaries -7, ,124 Other investments -32, Cash flow from investments -118,881-42, ,624 Cash flow from financing activities Settlement for sale of interest rate derivatives 0 20,588 23,429 Received from raising of new equity ,308 Received from raising of new long-term debt 42,260 10,550 97,450 Other financing 0 11,300 0 Repayment of long-term interest bearing debt -2,839-2,089-8,510 Cash flow from financing activities 39,421 40, ,677 Effect of exchange rate differences ,051 1,001 Net change in cash -8,897 28, ,924 Cash at bank start of period 188,308 34,384 34,384 Cash at bank end of period 147,143 62, ,308 Net change in cash -41,165 28, ,924 6

7 Siem Offshore Inc - Notes to the First Half 2008 Report Segment reporting (Amounts in USD 1 000) 2Q Q-2007 YTD YTD Fiscal year 2007 Unaudited Unaudited Unaudited Unaudited Audited Revenue by business area Supply/crew fleet 37,446 28,994 69,391 53, ,714 MRSV 6,879 3,689 15,137 6,819 21,602 Combat Management Systems 2,137 1,686 4,544 2,360 7,703 Other 1, , Total 47,674 34,434 90,379 62, ,342 Depreciation by business area Supply/crew fleet 6,579 3,635 13,104 7,196 17,545 MRSV , ,191 Combat Management Systems Other Total 7,733 3,910 15,406 7,728 18,961 EBIT by business area Supply/crew fleet 17,417 13,182 28,649 26,813 65,707 MRSV , ,419 Combat Management Systems , ,509 Other ,546 6,207 13,975 27,625 Total 16,549 23,139 35,664 40, ,259 Property, plant & equipment (Amounts in USD 1,000) Intangible assets Tangible Vessel under construction Vessels and equipment Total Purchase cost per ,055 79, , ,334 Capital expenditure 0 99,871 13, ,036 Vessels delivered in (63,758) 63,758 0 The year's disposal at cost 0 0 (37) (37) Effect of exchange rate differences 0 0 5,730 5,730 Purchase cost per , , , ,063 Accumulated depreciation per (823) 0 (15,165) (15,988) The year's ordinary depreciation 0 0 (14,570) (14,570) The year's disposal of acc. depreciation Acc. depreciation per (823) 0 (29,702) (30,525) Net book value per , , , ,538 Economic life years The USD 9,232 of intangible assets recorded at 30 June 2008 includes USD 6,865 related to Siem WIS AS patented technology for the drilling industry. The balance of intangiable assets, USD 2,367, relate to specific contracts for the Brazilian crew/supply fleet. The costs are amortised over the term of the specific charters contracts. Total amortisation during first half 2008 was USD

8 Net interest bearing debt (Amounts in USD 1 000) Unaudited Unaudited Audited Bank deposits 147,143 62, ,308 Short-term interest bearing debt -30,120-3,643-23,891 Long-term interest bearing debt -282, , ,050 Net interest bearing debt -165, ,797-80,633 Long-term debt Facility Drawn Creditor / Guarantor Currency Amount Amount Interest rate Duration Instalments HSH Nordbank AG USD 220, ,000 (Libor %) Quarterly instalments of USD Quarterly instalments of USD HSH Nordbank AG - Working Capital Facility USD 30,000 0 (Libor %) 2009 DvB Bank N.V. Nordic Branch GBP 10,690 10,690 (Libor %) Semi annual instalments of GBP 520 SpareBank1 SR-Bank NOK 346, ,167 (Nibor %) Semi annual instalments of NOK Banco Nacional Development Social USD 3,676 3, % (fixed) 2012 Semi annual instalments of USD 460 Eksportfinans (CIRR loan) NOK 486, ,450 Commitments Siem Offshore Inc - Notes to the First Half 2008 Report Capital expenditure contracted at the balance sheet date, but not yet incurred, is as follows: (Amounts in USD 1,000) Combined contract value end of period for the vessels 1,297,596 1,261,367 Instalments paid 115,838 79,724 Unpaid instalments (to be paid in 2008 or later) 1,181,758 1,181,643 Instalments falling due over the next 3 years (Amounts in USD 1,000) NOK USD , , ,090, , ,206, ,221 Total 6,004,042 1,181,758 The Company has entered into contracts with Kleven Verft AS for the building of 10 large Anchor Handling Tug Supply vessels (AHTS) and 2 large-size PSV of MT 6017 Mk II design. The Company has also, through its 51% JV Siem Meling Offshore DA, entered into a shipbuilding contract with Eidsvik Skipsbyggeri AS for a PSV of VS 485 design. The Company's subsidiary, Siem Consub SA, has entered into a contract for the building of two Fast Supply Vessels of GPA 150 design and two Fast Supply Vessels of GPA 132 design. Consolidated statement of changes in equity Total number of shares Share Capital Share prem. reserves Other reserves Retained earnings Shareholders' equity Minority interest Total equity Equity as of ,891,866 2, ,448-17, , ,964 13, ,859 Minority interest arising on business combinations 0 6,506 6,506 Other items The year's result 43,036 43, ,327 Effect of exchange rate differences 5,190 5, ,844 Equity as of ,891,866 2, ,448-12, , ,190 21, ,536 Specification of minority interest arising on business combinations : New equity Siem Offshore Meling DA 5,332 New equity Siem WIS AS 1,174 Total 6,506 8